As Election Nears, Keeping Donors A Secret Is Trickier

Some of the groups running ads this election season haven't been required to disclose their donors. But as Election Day draws nearer, some of the rules are changing, making campaign ads a riskier business for those who want to keep donors a secret.

Republican Mitt Romney's campaign put up 15 new ads Friday in eight battleground states. In those eight states, the Romney and Obama teams have spent $381 million since May 1, according to an NPR analysis of data compiled by the National Journal.

Republicans have outspent Democrats in five of the eight states, and, overall, they lead by $25 million.

Two pro-Republican groups account for two-thirds of all the GOP spending and more than the Romney campaign itself. One group is Americans for Prosperity, which is backed by billionaires David and Charles Koch. The other, cofounded by strategist Karl Rove, is Crossroads GPS.

Americans for Prosperity and Crossroads GPS are technically social welfare organizations, so they aren't required to disclose their donors. But now that the election is fewer than 60 days away, maintaining secrecy is a little harder.

There's a legal "window" that closes 60 days before the election. Once it's shut, groups are required to disclose the money behind so-called "electioneering" ads. Those are TV and radio ads that talk about candidates but don't expressly tell you how to vote.

The window for the presidential campaigns actually closed 30 days ago, since the conventions are considered to be primary elections. Now, as of Friday, the window is closed for Senate and House races, too.

To avoid disclosure rules, social welfare groups can switch to "express advocacy." These kind of ads explicitly advise viewers how to vote or whom to support, but don't have a disclosure requirement. According to tax code, however, social welfare groups aren't supposed to be political organizations. So if a group does too much express advocacy — generally considered to be more than half a group's activity — it can get into trouble with the IRS.

So they have to talk to their lawyers — and roll the dice.

"There are 10s — if not 100s — of millions of dollars in the gamble," says Greg Colvin, a San Francisco lawyer who specializes in the law for tax-exempt organizations. "They're gonna cross their fingers and hope that they spent less than 51 percent of their money on ads that the IRS will not consider to be political."

Crossroads GPS and Americans for Prosperity didn't respond Friday to queries on how they plan to proceed.

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Transcript

SCOTT SIMON, HOST:

Yesterday marked 60 days until Election Day, and that has special significance in election law. And it could affect the way some big political advertisers spend their money from here on out. NPR's Peter Overby reports.

PETER OVERBY, BYLINE: Republican Mitt Romney's campaign put up 15 new ads yesterday in 8 battleground states. In those eight states, the Romney and Obama teams have spent $381 million since May 1st. That's according to an NPR analysis of data compiled by National Journal.

Republicans have outspent Democrats in five of the eight states and overall, they lead by $25 million. Two pro-Republican groups account for two-thirds of all the GOP spending, and more than the Romney campaign itself.

(SOUNDBITE OF POLITICAL AD)

UNIDENTIFIED WOMAN #1: We must replace President Obama. Americans For Prosperity is responsible for the content of this advertising.

OVERBY: That's from one of the groups, Americans For Prosperity, which is backed by billionaires David and Charles Koch. The other group, co-founded by strategist Karl Rove, is Crossroads GPS.

OVERBY: Americans For Prosperity and Crossroads GPS are technically social welfare organizations, so they aren't required to disclose their donors. But now that the election is less than 60 days away, maintaining secrecy is a little harder.

There's a legal window that closes 60 days before the election. Once it's shut, groups are required to disclose the money behind so-called electioneering ads. Those are TV and radio ads that talk about candidates, but don't expressly tell you how to vote. That Tell Obama spot from Crossroads GPS is one example.

The window for the presidential campaigns actually closed 30 days ago, before the conventions. But now the window is closed for Senate and House races too. A social welfare group can just switch to express advocacy like that Americans For Prosperity ad, saying we must replace President Obama.

But, if a social welfare group does too much express advocacy, it can get into trouble with the IRS. That's because these groups aren't supposed to do politics. So they have to talk to their lawyers and roll the dice.

GREG COLVIN: There are tens, if not hundreds of millions of dollars, in the gamble.

OVERBY: Greg Colvin is a San Francisco lawyer who specializes in the law for tax-exempt organizations.

COLVIN: They're going to cross their fingers and hope that they spent more than 51 percent of their money on ads that the IRS will not consider political.

OVERBY: Crossroads GPS and Americans For Prosperity didn't respond yesterday to queries on how they plan to proceed.